You can believe whatever you want, but it’s not the end of the economy. We all know this is not going to be an excellent economic year. We all know it’s going to take a while to recover certain stamina. No one doubts that a V-shaped recovery doesn’t match with the scientific analysis and reality about the growth of immunity and our efforts to “flatten the curve.” There’s not probably going to be any V. So yes, it is a well-known secret we can forget about 2020.
This last week has been one of “worst ever data on the records.” What else could we expect if we put 75% of the world’s economic activity to a sudden stop? We went from full highway-speed to zero in days. A small part of the activities, the ones we call “essential,” has been redirected to another road for them to be able to go as fast as possible, to keep everyone safe during the traffic jam. Some of the cars stuck will be late, for sure; some will lose opportunities due to being for no-one-knows how long in the middle of the highway.
But once the authorities “clean the road,” cars will still be working, and they’ll be ready to continue with the trip. It wouldn’t be sensible to say we’re going to be on time to our destination no matter what, because this is impossible. But it wouldn’t be reasonable either to say we’re to going to be able to travel ever again. Highways are still there, cars are ok, and we’ll have our pockets full of money to buy gas, because governments are going to take care of that, putting on the table the most significant amount of public resources since (probably) the Marshall Plan after WWII. With numbers that are so large that seem meaningless.
But let’s leave the traffic jam analogy and come back to reality. We should start by putting things clear and a bit in perspective. Imagine the economy stops entirely for a quarter (which is not true, because many activities are still working at full capacity, but let’s assume that): according to IMF data, world GDP in 2019 was around 91 trillion US dollars (at current prices). If we slash 25% of that, we could go to a GDP of 68 trillion for 2020, which is similar…
